Transitioning from being a straight HVAC company to being one that focuses on whole-house performance contracting (WHPC) can be a smart move for a growing business. But it’s not without challenges, and it takes a lot of upfront planning to be successful out of the gate. That’s why DOE’s Building America program created the Strategy Guideline: Transitioning HVAC Companies to Whole House Performance Contractors. This how-to guide, by Arlan Burdick of IBACOS, a Building America research team leader, explains how to make a successful transition to WHPC. “Achieving comfort isn’t just about the HVAC components anymore: it’s more about how the home performs as a system. HVAC contractors currently work on, and service, the most complicated equipment in a home, positioning them perfectly to affect overall performance. To do this, they’ll need to broaden their education base and change how they view HVAC. Minimizing risk and maximizing whole-house efficiency have to become top priorities,” says Burdick. (For more on Building America, see “Innovation in Housing Performance.”)

Blaine Fox, of Warm Thoughts Communications and one of the industry experts who participated in the Building America work, thinks that many of the top HVAC companies will want to make the transition. “The best HVAC companies want the top position as the expert for providing both efficiency and comfort to their clients. They won’t want to cede that to someone else,” says Fox. Mary Ellen Conforti of Air Group, a large HVAC and WHPC company in New Jersey, notes that the expanded scope of work has been a plus for them. “We took on whole-house work as part of our offering, since we had the staff and systems in place from our HVAC business. We wanted to maintain control, so we invested in the training and equipment. It’s been a very good move for us.”

The Building America Strategy Guideline says that many HVAC companies, like Air Group, would like to take on the whole-house work themselves. But to succeed, they must know what it takes to provide those additional services. The strategy guideline provides clear guidance in this area, detailing transition strategies for moving from an HVAC business to one that incorporates WHPC. The strategies are distilled down into the specific tasks that vary between the two types of business, and they spell out how an HVAC company needs to adjust its practices for WHPC.

The typical integrated WHPC business operates in seven areas, each of which has specific business functions, as shown in Table 1. Some of these functions are different in WHPC companies than they are in HVAC companies. These functions are identified by shaded cells in the table.

Each business function breaks down further into specific work activities (not shown in table). For example, training includes technical training, safety training, training in management, and training in sales. Of all the work activities in a WHPC business, there are 15 for which a transitioning HVAC contractor will find guidance especially valuable. These are

technical training;

equipment requirements;

relationship to vendors;

strategic planning;

customer education;

community engagement;

arrival process;

conducting on-site customer interviews;

assessing whole-house performance;

customer package presentation;

assessment reporting;

state or local program reporting;

work scope and procedures;

job completion verification; and

relationship to subcontractors.

Fact sheets to provide additional detail have been developed for eight of these work activities and are included in the strategy guideline. Each fact sheet begins with a brief description of the issue and provides concise how-to information for the transitioning contractor as well as links to other resources. The following are excerpts from the Vendor Relations and Subcontractor Relations fact sheet:

Issue

Home performance contractors are dependent on a large network of partnerships that contribute in important ways to the completion of comprehensive home improvements. Vendors are essential in providing the necessary systems, appliances, and materials that will need to be installed, while subcontractors will often perform the actual installations. Establishing strong relationships on both sides of this supply chain will help you complete quality work in a timely and cost-effective manner, which, in turn, will contribute to your good reputation.

Vendors—Best Practices

There are a number of factors to look for when choosing vendors to supply the materials for your home performance jobs. Cost is one factor, but other considerations are important as well. Keep in mind the following issues when evaluating which vendors to work with:

Price versus quality. While a low price will help you make competitive bids, in the long run your reputation can be more impacted by the vendor’s service, reliability, and quality. Find vendors who balance all of these factors well.

Technical support. For complex systems, you may need vendors with the technical expertise and quality of service to provide guidance both during and after installation.

The right product. Find vendors or work to get your preferred vendor to stock the best products for your home performance jobs. Don’t necessarily trust that what they have always carried will suffice. Research the best home performance products (for example, spray foam kits, duct mastic, caulking, and HVAC equipment) and make sure your vendors keep these in stock.

Loyalty versus shopping around. Sticking with one or just a few vendors can increase your quality of service and sometimes bring volume discounts. On the other hand, spreading out your orders allows you to search for lower prices and more easily meet designer, program, or customer specifications. Choose the option that works best for your business.

Once you have chosen your vendors, follow these guidelines to help you build and maintain productive relationships that will keep your interactions flowing smoothly:

With every transaction, fill out a clearly written purchase order that specifies exactly what you expect to have delivered and when.

Before completing your supply order, make sure you have established delivery and invoicing procedures that both parties agree upon.

Try to avoid last-minute/expedited orders and frequent order changes to increase the chances of getting the correct supplies on time and on budget.

Consider signing written agreements with key vendors that clarify the basic processes of your interactions and make them routine.

Subcontractors—Best Practices

Given the wide range of measures that often need to be installed as part of comprehensive home performance improvements, you may find yourself lacking certain types of expertise. This raises the question of whether you should try to develop the required knowledge in-house or partner with subcontractors for some of the work. Factors to consider when making this decision include the following:

Work flow. Hiring subcontractors may make sense for jobs that tend to be intermittent and unpredictable. Keeping employees on hand for this type of work may not be worth the cost.

Quality control. Keeping your work in-house gives you direct oversight of all work that is done and can cut down on conflicts and complications. On the other hand, the benefits may not be worth it if a subcontractor with a good reputation can provide greater technical expertise.

Timeliness. Subcontractors maintain their own schedules and may run into scheduling conflicts or be unavailable for a particular job. However, the flexibility of hiring subcontractors only when needed can still be cost-effective.

Assuming you do choose to use subcontractors in at least some cases, the following tips will help you build and maintain productive relationships with them:

Require contractors to demonstrate proper licensing and other credentials and provide references that establish their capacity to perform competent, quality work.

Be sure that all subcontractors carry proper insurance and workers’ compensation policies. Your own provider can advise you on whether a subcontractor’s policies should name you as an additional insured for a given job.

learn more

You’ll find a wealth of helpful information, including the Strategy Guideline: Transitioning HVAC Companies to Whole House Performance Contractors, on Building America’s Publications web page:

Set a time line for job completion and establish clear milestones that will keep everyone on schedule.

Perform regular inspections of your subcontractors’ work to correct any problems before they become too large.

Set clear expectations about the level of quality you require, including conditions for termination based on underperformance and incentives for exceptional work.

Be sure to follow federal guidelines that define a subcontractor versus an employee. Consult with your legal advisor to be sure you do not cross this line unintentionally.

If your HVAC company is looking to leap into WHPC, check out the full strategy guideline on the Building America web site (see learn more below).

Christine Liaukus is an architect and Certified Passive House Consultant at the Center for Building Knowledge at the New Jersey Institute of Technology, in Newark, New Jersey.

This article is part of a series sponsored by Home Performance with Energy Star, jointly managed by the U.S. Department of Energy and Environmental Protection Agency. The opinions, views, and ideas expressed within this article are those of the author and do not necessarily reflect the official policy or position of any agency of the U.S. government.

Innovation in Housing Performance

DOE’s Office of Energy Efficiency and Renewable Energy Building Technologies program (BTP) strives to bring energy-efficient products and services to the nation to save consumers and businesses money, reduce greenhouse gas emissions, grow the domestic economy, and improve U.S. energy security. More specifically, the residential arm of BTP aims to reduce the energy required to operate existing residential buildings by 40–50% at a cost less than the cost of the energy saved (1,250 trillion Btu in annual savings by 2020; 4,500 trillion Btu by 2030).

The residential arm of BTP has six key initiatives designed to support the reduction of energy use in the residential buildings sector. These initiatives are

Building America—developing key innovations for home performance;

Solar Decathlon—inspiring the next generation of high-performance home professionals;

Better Buildings Neighborhood Program—working with state and local governments to encourage their citizens to reduce energy use;

Home Energy Score—providing a way for homeowners and industry to compare home energy performance;

Home Performance with Energy Star—helping homeowners to make whole-house energy improvements; and

Guidelines for Home Energy Professionals—laying the foundation for a trained workforce.

The Building America program, creator of the Strategy Guideline: Transitioning HVAC Companies to Whole House Performance Contractors, works to develop major technical and business innovations that transform the performance of new and existing homes and the U.S. housing market. This premiere residential research program has been working for nearly two decades to develop compelling solutions to building science problems facing the U.S. housing industry. Solutions developed as part of Building America’s research program have improved energy performance and occupant health in homes and increased building durability and safety.

Each year, the Building America program rolls out guidance and tools on a variety of critical issues that affect high-performance homes. These tools are based on the latest research. They are catalogued as Building America innovations, and fall into four general categories: Advanced Technologies and Practices, House-as-a-System Business Case, Effective Guidance and Tools, and Infrastructure Development.

This year, in addition to a cadre of technical solutions, the Building America program will roll out a significant new innovation—the Building America Solutions Center—that will organize Building America research results and other critical resources into one easy-to-access library of tools and resources.

The Strategy Guideline showcases the kind of innovative solutions and best practices developed by the Building America program. You can find more solutions to these and other business and technical challenges related to home performance at www.buildingamerica.gov.

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In 2011, Gavin Hastings, an Arizona Public Service (APS) program manager, began envisioning a collaborative that would advance the Home Performance with Energy Star (HPwES) programs in his region.
HPwES provides whole-house solutions for homeowners, offering ...